Tax People - Any Truth to This?

[bpwallace49]

It happens more than you think. I know we've had to jump through all types of hoops to try to insulate ourselves from the death tax. You see our bonding capacity is directly related to our assets, and when our bonding capacity is lowered, that means you've pretty much put a ceiling on how much work we can do. If we are set up to do $80 Million a year and because of this tax we can only bond $60 Million a year that is going to make it real hard to continue doing business the way that we have in the past. I know the death tax is truly a killer for most construction companies. We've taken all kinds of steps to insulate ourselves from this tax, but those have been costly steps where the money could have been used to improve our business rather than safeguard it from the government.

 

Then why dont you just buy the company instead of just have it passed down to you?

[Perchoutofwater]

Then why dont you just buy the company instead of just have it passed down to you?

 

I've all but bought the company, if it weren't for the recession I'd have bought the old man completely out in another year or two. If it weren't for having to protect myself and the company from the death tax, I would have been able to buy him out two or three years ago. You see bonding capacity has nothing to do with me owning the company or not, it has to do with money assets that me and my family can put up basically as collateral to the bonding company. The companies bonding capacity is based upon not only the company's assets, but also my personal assets and those of my father. If my father dies on January 1st, a large portion of his assets will go to the government directly reducing our companies future bonding capacity. Which in turn would reduce the amount of work that I can perform, not because we are not capable, but because we do not have the financial backing we had. This would inevitably cause us to drastically reduce our workforce, had I not jumped through all kinds of very costly hoops to insulate myself from it. The fun part is knowing should my kids bust their ass and decide to go into the business we get to do it all over again in 20 years. It wouldn't be so bad if they didn't have a minimum estate size, and all estates were taxed at the same rate, of course if it was set up like that, we'd never have a death tax because the masses would revolt.

[bpwallace49]

I've all but bought the company, if it weren't for the recession I'd have bought the old man completely out in another year or two. If it weren't for having to protect myself and the company from the death tax, I would have been able to buy him out two or three years ago. You see bonding capacity has nothing to do with me owning the company or not, it has to do with money assets that me and my family can put up basically as collateral to the bonding company. The companies bonding capacity is based upon not only the company's assets, but also my personal assets and those of my father. If my father dies on January 1st, a large portion of his assets will go to the government directly reducing our companies future bonding capacity. Which in turn would reduce the amount of work that I can perform, not because we are not capable, but because we do not have the financial backing we had. This would inevitably cause us to drastically reduce our workforce, had I not jumped through all kinds of very costly hoops to insulate myself from it. The fun part is knowing should my kids bust their ass and decide to go into the business we get to do it all over again in 20 years. It wouldn't be so bad if they didn't have a minimum estate size, and all estates were taxed at the same rate, of course if it was set up like that, we'd never have a death tax because the masses would revolt.

 

Soo . . wont you have the exact some problem when your father passes, whether or not there is a death tax? Are you an only child, and is your mother gone? Or would you inherit every penny?

 

I ask because unless you will inherit over 3.5 MILLION . . there was no tax. In 2011 the cap is paying zero tax on the first $1,000,000.00. If you will be recieving a lot more than that (and it sounds like you will) the way around that is for your father to give you the money to pay for a huge life insurance policy immediately from HIS assets . . becasue life insurance is not taxable. that way you can keep your bonding the same when your father passes on, because you keep your bonding capacity at a high level . . . . right?

[Perchoutofwater]

Soo . . wont you have the exact some problem when your father passes, whether or not there is a death tax? Are you an only child, and is your mother gone? Or would you inherit every penny?

 

I ask because unless you will inherit over 3.5 MILLION . . there was no tax. In 2011 the cap is paying zero tax on the first $1,000,000.00. If you will be recieving a lot more than that (and it sounds like you will) the way around that is for your father to give you the money to pay for a huge life insurance policy immediately from HIS assets . . becasue life insurance is not taxable. that way you can keep your bonding the same when your father passes on, because you keep your bonding capacity at a high level . . . . right?

 

My brother and I are in business together. Mom is still around and both mom and dad are healthy. We've been paying for insurance among other things, but that insurance isn't cheap especially considering the heart disease that runs in our family. Those insurance premiums reduce our bonding capacity by over $1Million a year currently. Of course without the insurance, if mom and dad died in a car wreck on January 1st our bonding capacity would be reduced by close to $20 Million. The thing that really just irritates me is that why don't we tax all estates, rather than just some?

[Ursa Majoris]

Dumbest thing you can do is raise taxes in a down economy. Believing this isn't a huge tax increase on small business and a redistribution of wealth is liberal kool aid drinking at it's finest. Oh, but let's pass the small business bill which sounds good, but doesn't actually help businesses, unlike these tax provisions. Hit'em in the head with the left, and pretend to pat them on the back with the right.

 

Letting these tax provisions die off is going to be very bad for the economy and business.

If taxation is such a big deal to business, why is the stock market exactly where it was 10 years ago, coinciding exactly with the 10 years of capital gains tax being cut? Also, why did business do so well under Bill Clinton with higher tax rates?

[Ursa Majoris]

I know you're just following obama's own talking point, but that is pretty freaking dishonest, trying to in any way associate reagan's name with higher marginal tax rates. if you look at this, the top marginal tax rate when reagan took office was 70%. then they were methodically lowered over the next several years until it was 28% when he left office.

I thought marginal tax rates were meaningless? According to you, they were last time I was talking about them.

[Perchoutofwater]

If taxation is such a big deal to business, why is the stock market exactly where it was 10 years ago, coinciding exactly with the 10 years of capital gains tax being cut? Also, why did business do so well under Bill Clinton with higher tax rates?

 

How many pages of federal code have been added since 2000? How many new regulations? What percentage of GDP was taken up by social security, medicare, and medicaid? How are bond holders being treated in bankruptcy court? How business friendly is congress? What legislation is currently on the table? What is going on in the rest of the world? Taxes are but one variable, an important variable, but only one of many.

[Perchoutofwater]

I thought marginal tax rates were meaningless? According to you, they were last time I was talking about them.

 

Do we have as many deductions as we had prior to Reagan? If not then raising the marginal rate is not meaningless. Marginal rates prior to Reagan and marginal rates after Reagan is like comparing apples to oranges. Marginal rates under the last years of Reagan and now is like comparing oranges to nectarines or something like that.

[Azazello1313]

I thought marginal tax rates were meaningless? According to you, they were last time I was talking about them.

 

please do tell what the f you are talking about.

[yo mama]

My brother and I are in business together. Mom is still around and both mom and dad are healthy. We've been paying for insurance among other things, but that insurance isn't cheap especially considering the heart disease that runs in our family. Those insurance premiums reduce our bonding capacity by over $1Million a year currently. Of course without the insurance, if mom and dad died in a car wreck on January 1st our bonding capacity would be reduced by close to $20 Million. The thing that really just irritates me is that why don't we tax all estates, rather than just some?

Have you considered the possibility that you just need a more expensive estate planning attorney?

[Azazello1313]

Az . . follow your own link. Did you also notice what the column on the right side means? While it was reduced . . you are exactly right on that . . it also lowered the threshold of taxable income from 215K when he took office and it was 70% and reduced it to 29,700 when he left office and it was 28%.

 

Does that mean anything to this discussion? That while the tax rate fell, it was just shifted more to the middle class versus the very wealthy? The top tax rate applied to people that made over 215K in 1980 (which was pretty damn wealthy back then . . but 70% was still too high, imo) and then the tax rate was "lowered" by applying it to a lot more people . mainly everyone that made over 30k when Reagan left office.

 

All it did was shift the same tax burden backwards by including more people in that same rate . . . right? and why would it be wrong to apply that same rate again? Is it because trickle down economics worked very well? Seriously asking your opinion on this Az . . . so please try to refrain from a snarky reply.

 

Or am I reading that chart you linked to incorrectly?

 

well yeah, reagan basically made the tax code a lot flatter, where most everything past the standard deduction and personal exemptions were taxed at the 28% rate. it also increased a lot of deductions to the point where it did not, as you say, end up shifting the tax burden backwards. and you can see what happened to overall revenues. did reaganomic work? I dunno, you tell me, was the economy stronger when carter left office or when reagan left office?

 

but none of this has anything to do with the disingenuous claim that raising the top rate will "just be bringing it back to where it was under reagan". I prove you wrong, and as usual, you try and change the subject and post a couple of these

[Yukon Cornelius]

Have you considered the possibility that you just need a more expensive estate planning attorney?

[Ursa Majoris]

I dunno, you tell me, was the economy stronger when clinton carter left office or when bush reagan left office?

I dunno, you tell me.

[Ursa Majoris]

please do tell what the f you are talking about.

The last time I mentioned marginal tax rates both you and Perch said they were largely irrelevant due to the real burden being overall taxes. Now suddenly you want to talk about marginal tax rates again.

[Azazello1313]

The last time I mentioned marginal tax rates both you and Perch said they were largely irrelevant due to the real burden being overall taxes. Now suddenly you want to talk about marginal tax rates again.

 

you are gonna have to give me a link. you are either twisting or misinterpreting what I may have said. I don't believe I have ever downplayed the importance of explicit and implicit marginal tax rates, and their incentive effects on economic activity. high marginal tax rates, especially at the lower income levels, are the biggest poverty trap out there and a result in a major unintended consequence of the welfare state. at the higher income levels, higher marginal tax rates really hinder job creation and economic growth.

[westvirginia]

The last time I mentioned marginal tax rates both you and Perch said they were largely irrelevant due to the real burden being overall taxes. Now suddenly you want to talk about marginal tax rates again.

 

I think you're confusing az and me. I'm the one who says nominal rates don't matter - effective rates do. This is why you have to look at things in their totality, like the top rate being 70% under Carter, but you could deduct every dime of consumer interest (credit cards, car loans, your loan on your boat, etc) from gross income.

[westvirginia]

I dunno, you tell me.

 

Nice obfuscatory straw-man that means absolutely nothing to the discussion they were having. But hey, I can understand the buyer's remorse at this point. The man doesn't have the judgment to do the job, and doesn't have advisers to carry him when he's weak.

[Azazello1313]

I'm the one who says nominal rates don't matter - effective rates do.

 

well I agreee with that too. effective rates matter more than nominal rates, and marginal rates -- the amount you pay (or lose in benefits) on your next dollar of earned income -- matter even more, at least when we're talking about influencing economic behavior.

[Ursa Majoris]

Nice obfuscatory straw-man that means absolutely nothing to the discussion they were having. But hey, I can understand the buyer's remorse at this point. The man doesn't have the judgment to do the job, and doesn't have advisers to carry him when he's weak.

It means EVERYTHING to the discussion they were having. If you want to say the economy was stronger at the end of 1988 versus 1980, you'd be right. It would be equally right to say the economy was stronger in 2000 than 2008. Can't have it both ways.......

[Yukon Cornelius]

It means EVERYTHING to the discussion they were having. If you want to say the economy was stronger at the end of 1988 versus 1980, you'd be right. It would be equally right to say the economy was stronger in 2000 than 2008. Can't have it both ways.......

yes he can he is bipolar